The original complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between June 9, 1999 through November 20, 2001, thereby artificially inflating the market price of the Company's common stock. Throughout the Class Period, defendants issued false and misleading statements regarding LMG's quarterly and annual financial performance and filed reports confirming such performance with the United States Securities and Exchange Commission ("SEC"). Defendants misrepresented LMG's financial results, and failed to disclose weaknesses in its financial internal controls. During the Class Period, financial results for fiscal 1999 were restated twice. Financial results for the first, second, and third quarter of 2000 were each separately restated once. In addition, year end results for fiscal 2000 were also restated. Independent Auditor Defendants, Slayton (auditor for fiscal 1999) and Feldman Sherb (auditor for fiscal 2000) falsely represented that year end results had been presented in accordance with generally accepted accounting principles ("GAAP") based upon an audit that was purportedly conducted in compliance with generally accepted auditing standards ("GAAS"). Defendants' misconduct included: (a) booking sales that later had to be reversed; (b) failing to account for escalating costs and non-salary based compensation; (c) misclassifying inventory as capital equipment; (d) failing to account for expenses incurred by LMG which were paid by related entities in the period incurred; (e) failing to book expenses due to the settlement of debt with related parties; and (f) substantially understating interest expenses. Moreover, LMG falsely represented that it had received outside funding critical to the growth of the business when, in truth, LMG knew that the announced financing would not be forthcoming. LMG also deceptively represented that backlog orders for its outdoor media projection systems had increased by $20 million. In the two years following this statement, LMG's reported revenues never approached this level. Defendants' wrongful course of conduct served to artificially inflate the price of LMG common stock during the Class Period. While the price was being artificially inflated by LMG's misrepresentations, Omega Financial (a financial services firm 38%-owned by defendant Simon) sold substantial amounts of LMG common stock. By the last day of the Class Period, the price of LMG common stock, which had traded for as much as $17.50 per share, had declined approximately 99% to $0.450 per share.
On August 5, 2002, Judge Richard Owen granted the motion to consolidate three related actions. Judge Owen also granted the motion to appoint lead plaintiffs and approved lead plaintiffs’ selection of lead counsel. On October 22, 2002, the lead plaintiffs filed a Consolidated Amended Complaint. On April 16, 2003, the plaintiffs filed a motion for entry judgment by default against all defendants. In May 2003, defendant Feldman, Sherb & Co. filed two motions to dismiss. On June 2, 2003, Judge Owen signed the Order withdrawing the default motion against defendant Feldman, Sherb & Co. only. On June 27, 2003, another defendant filed a motion to dismiss. On December 19, 2003, Judge Owen signed the Memorandum and Order granting defendant Feldman, Sherb & Co.’s motion to dismiss with prejudice. The plaintiffs filed a Notice of Appeal. On September 1, 2004, the plaintiffs filed renewed motions for entry of judgment by default. On September 17, 2004, Judge Owen denied the pending motion to dismiss. On June 7, 2005, the Court entered the certified copy of the Mandate from the U.S. Court of Appeals, affirming the District Court’s decision to dismiss Feldman, Sherb & Co. with prejudice. On May 22 and September 25, 2006, the plaintiffs filed two more renewed motions for entry of judgment by default. On February 22, 2008, the case was reassigned from Judge Richard Owen to Judge Lewis A. Kaplan. On February 28, 2008, one of the motions for default judgment was withdrawn.
According to an Order signed by Judge Kaplan on October 22, 2008 On April 24, 2008, the court directed the parties to file a joint pretrial order no later than May 30, 2008. The joint pretrial order was not filed and no further activity has occurred. In the circumstances, the parties are directed to show cause, on or before October 28, 2008, why the action should not be dismissed for lack of prosecution. On November 12, 2008, Judge Kaplan signed the Order dismissing the action. According to the Order, Plaintiffs' counsel has advised the Court that there is no possibility of recovery here and that plaintiffs' consent to dismissal without prejudice. Accordingly, the action is so dismissed. The Clerk shall close the case.